Entrepreneurs Pack Up And Go Home

The Wall Street Journal:

In February, after 12 years in a downtown La Jolla, Calif., storefront, Brett and Kimberly Buffington packed up their children’s clothing boutique, Eurochild LLC, and moved it into their home.

“Business just stopped on a dime” 18 months ago, Buffington says, and he and his wife were unable to renegotiate their $7,000-a-month rent.

Working at home allows the couple to save $12,000 a month in rent and other overhead costs and focus on revamping EuroChild’s Web site to attract new customers. “You don’t have overhead, you don’t have to manage employees, you don’t have to keep the store clean — all the stuff that comes along with running a retail business,” Buffington says.

But as more small businesses around the country ditch their storefronts and offices to cut expenses during the recession, they’re encountering new hurdles. Many of them have to deal with home-business zoning ordinances and take on new insurance and marketing costs. The Buffingtons, for example, faced $1,200 a year for home-based-business commercial insurance, as well as an expanded online marketing budget.

Business owners also confront the challenge of making it appear to loyal customers that nothing significant has changed. “Clearly, the biggest mistake is having a huge drop in customer base,” says Larry Cox, associate professor of entrepreneurship at the Graziadio School of Business at Pepperdine University in Malibu, Calif.

“You have to have a sense by talking to customers of how attached they are to the locations,” he says. “Will they continue to do business with you with a different model?”

Photo by Eurochild.

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